Amazon has announced that it will begin airing ads in its Prime Video television shows and movies starting on January 29, 2024. As a result, it means that both Prime Video subscribers and users having a stand-alone Prime Video subscription will experience “limited” ad interruptions from that date onwards. However, subscribers can avoid ads by paying an additional $2.99 per month for a commercial-free subscription.
Tiered Subscription Model of Amazon and Industry-Wide Shift
Amazon’s decision to introduce ads in Prime Video aligns with the industry-wide shift towards a tiered subscription model. Other streaming platforms, such as Disney+, Netflix, Hulu, and Peacock, have already implemented ad-supported subscription options alongside more expensive ad-free offerings. In addition, this model allows streaming services to generate revenue from both advertisements and higher-tier subscriptions.
Advertising Business and Revenue of Amazon
Amazon’s advertising business, which includes Amazon marketplace advertisements and Freevee, has been a significant source of revenue for the company. In the third quarter of 2023, Amazon generated approximately $12 billion in advertising revenue. As a result, it marked a 26% increase compared to the same quarter the previous year.
Impact on Subscribers and Content Investment
Amazon stated that introducing ads in Prime Video will enable the company to continue investing in compelling content. In addition, it will increase that investment over a long period of time. The company aims to have significantly fewer ads than traditional linear TV and other streaming TV providers. By offering a commercial-free subscription option for an additional fee, Amazon provides subscribers with the choice to enjoy uninterrupted content.
Starting January 29, 2024, Amazon will introduce ads in its Prime Video television shows and movies. Prime Video subscribers will experience “limited” ad interruptions. However, they have the option to avoid ads by paying an extra $2.99 per month for a commercial-free subscription. This move aligns with the industry-wide shift towards a tiered subscription model and will contribute to Amazon’s advertising revenue.